BNM: Headline inflation in Malaysia stable at 1.8 pct in April, core inflation up to 1.9 pct

BNM: Headline inflation in Malaysia stable at 1.8 pct in April, core inflation up to 1.9 pct

KUCHING (May 31): Malaysia’s headline inflation remained stable at 1.8 per cent in last month while core inflation edged up to 1.9 per cent compared to 1.7 per cent in March 2024, said Bank Negara Malaysia (BNM).

The increase in core inflation during the month was mainly driven by higher food away from home inflation at 4 per cent (March 2024: 3.5 per cent), the central bank said in a statement today.

However, this increase was partly offset by lower inflation recorded in the transport sector at 0.8 per cent (March 2024: 1.3 per cent), said the central bank.

According to BNM, exports growth rebounded to 9.1 per cent (March 2024, -0.9 per cent), driven by faster growth in manufactured exports and further expansion of commodities exports.

“Higher manufactured exports were driven by the recovery in electrical and electronics (E&E) exports, which recorded positive growth after eight months of contraction since August 2023.

“Meanwhile, non-E&E exports continued to expand strongly especially in machineries and construction-related materials. Looking ahead, exports are expected to improve gradually supported by ongoing recovery in E&E and sustained demand for non-E&E exports,” said BNM.

BNM said credit to the private non-financial sector grew by 5.4 per cent as at end-April 2024 (March 2024: 5.2 per cent), driven by higher growth in both outstanding loans of 5.9 per cent (March 2024: 5.7 per cent) and corporate bonds at 3.4 per cent (March 2024: 3.2 per cent).

It pointed out that business loan growth increased to 5.6 per cent (March 2024: 5 per cent) with higher growth in both working capital and investment-related loans.

Higher loan growth was also recorded across most business sectors including manufacturing and construction, added the central bank.

For households, BNM said outstanding loan growth was sustained at 6.2 per cent (March 2024: 6.2 per cent), with stable loan growth across most purposes including for the purchase of housing and cars.

BNM said domestic financial markets were mostly influenced by global investors’ expectations for the US policy rate to be high for longer.

Amid upside surprises to US inflation last month, BNM said financial market participants had further reduced their 2024 US policy rate expectations to only one to two cuts.

“Consequently, most regional currencies depreciated against the US dollar (regional1 average: -1.6 per cent), including the ringgit.

The ringgit, however, depreciated by a smaller magnitude (-0.8 per cent), amid the continued coordinated actions by the government and BNM to encourage inflows into the domestic FX market.

“The 10-year MGS yield increased by 12 bps (regional1 average: 44 bps) alongside a rise in US bond yields, while the FBM KLCI traded higher by 2.6 per cent (regional1 average: -0.9 per cent),” said BNM.

According to BNM, the banking system continued to record healthy liquidity buffers with an aggregate Liquidity Coverage Ratio of 152.2 per cent (March 2024: 150.3 per cent).

The central bank said aggregate loan-to-fund ratio remained broadly stable at 82.3 per cent (March 2024: 81.7 per cent).

“Overall gross and net impaired loans ratios remained stable at 1.6 per cent and one per cent respectively. Loan loss coverage ratio (including regulatory reserves) continues to be at a prudent level of 120.4 per cent (March 2024: 121.1 per cent) of impaired loans, with total provisions accounting for 1.5 per cent of total loans,” added BNM.

-Agency

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